Adam Smith, in book i of The Wealth of Nations ( 1776), pondered 'the
Causes of Improvement in the Productive Powers of Labour', and he was clear
that he had the answer: 'The greatest improvement in the productive powers of
labour, and the greater part of the skill, dexterity, and judgment with which it is
any where directed, or applied, seem to have been the effects of the division of
labour.'1 He illustrated his argument with the famous example of the pin trade. A
single workman could scarcely make one pin a day and certainly no more than
twenty; division of tasks between specialized workers, each undertaking a
distinct part of the process, permitted ten men to make 4,800 pins each a day, or
an increase of at least 240-fold in labour productivity. The division of labour was
dear in the pin trade, for relatively few workers were needed and they were
gathered together in a single workshop; trades which employed a large number
of workers 'to supply the great wants of the great body of the people' were more
dispersed, and division was less obvious to the casual observer. But it was, argued
Smith, at the heart of the process of growth and led to similar gains in
productivity to those in the pin trade:

The division of labour . . . occasions, in every art, a proportionable increase of the
productive powers of labour. The separation of different trades and employments from
one another, seems to have taken place, in consequence of this advantage. This separation too is generally carried furthest in those countries which enjoy the highest degree of
industry and improvement; what is the work of one man in a rude state of society, being
generally that of several in an improved one. In every improved society, the firmer is
generally nothing but a farmer; the manufacturer, nothing but a manufacturer. The
labour too which is necessary to produce any one complete manufacture, is almost
always divided among a great number of hands. How many different trades are employed
in each branch of the linen and woollen manufactures, from the growers of the flax and
the wool, to the bleachers and smoothers of the linen, or to the dyers and dressers of the
cloth!
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